Case Study-Strategic Performance Management
The main focus area of this report is to analyze and maintain the strategic performance under the organization that is one of the important parts of any organization.
In this way, a suitable mission statement is also developed in this report that contains the key objectives of the company’s investors. Similarly, in order to effectively accomplished this report an environmental analysis is also being done with the help of PESTEL analysis.
On the basis of identified issues under the environmental analysis, 3 costing techniques are also determined and their limitations are also discussed (Noe et al., 2017). Along with this, this report also contains some principles of performance management and essential recommendations of an approach that is suitable for the scenario.
Background of the company
The company was introduced as the investors who wish to acquire a commercial broadcasting company under the EU. In this, a potential acquisition was also determined. Under this, the proposed acquisition is recognized as the listed company.
In concern of this company, the investors have the intention as the acquired company will be continued to be funded with a combination of equity and debt. Under this business, investor’s intention is to provide the permission for a high degree of autonomy for the management team under s framework related to the agreed strategic objective.
Apart from this, the main operations of the commercial broadcast business are across a number of communication media.
In this, the two most important sector of broadcasting is television broadcasting and radio broadcasting. With the help of this broadcasting company produce the programs.
As the activities of a commercial broadcaster are highly regulated and if the company breaches any regulation, it would result in significant fine so it is essential for it to operate its business under the license granted through the regulatory authorities (Rothaermel, 2015).
Formulation of the suitable and appropriate mission statement
In concern of the broadcasting industry organization, it is reflected that the investors of the company who wish to acquire the commercial broadcasting company in the EU have been facing some critical issues related to the strategic performance management under the company (Steinbach et al., 2017).
In this, investors are worried that how they can use the company’s published financial statement to access the performance and how they can monitor the performance of the company by using internal management information.
Similarly, they are also thinking that how the mission statement can be aligned with the organizational performance in respect to improving the organizational performance in terms of the finance as well as the profitability of the organization (Macedo et al., 2016).
On the basis of the above-mentioned facts, the company needs to develop its mission statement that should be strategic and aligned with the organizational issues so that these performance-related issues can be overcome with more effectiveness. In this way, the mission statement of the broadcast company is:
“To collaborate with the organizational people and the organization in the community to enhance the organization’s financial performance and make it capable to offer quality programs, learning opportunities as well as economic development for its region”
In respect of the above-mentioned mission statement, it can be explained that if the company in which investors wish to acquire a commercial broadcasting company, follows this mission statement, then it will be capable to eliminate its performance management related issues by improving and enhancing organizational performance.
In addition, it is also determined that a mission statement helps the organization in order to direct it in the organizational strategies (Bergh et al., 2016). In the same way, the above developed mission statement will be beneficial for the broadcast company as with this statement,the company can link the organizational mission statement with the organizational performance which can be measured by company’s financial statements.
Discuss an environmental analysis based on the provided data
While concerning the broadcast business, the environmental analysis is quite helpful for the commercial broadcast business as under the environmental analysis, PESTEL analysis and Porter’s Five Forces are included which help to critically analyze the country and the industry at a single time
so that business can earn competitive advantages by developing knowledge in concern of country’s environment including several factors and its industry competitors (Kassinis et al., 2016). In this way, environmental analysis is defined below:
PESTEL Analysis
- Political Factors
In concern of the political environment in the EU, it is determined that the main focus area of the EU constitution is the protection of individual liberty as well as the divisional power under a federal structure.
In addition, in the concern of broadcast industry company is maintaining the ongoing investigation in order to take over the potential bids inthe relation of the commercial broadcasting businesses (Durksen et al., 2016). In a similar manner, EU is more likely to a confederation in which several policy areas are federalized into a common institution that is capable to make laws.
- Economic Factors
Under the economic factors related to the broadcast business, it is found that EU has developed a single market within the territory of all its members and that is the major reason of increasing costs of acquiring content under the commercial broadcast businesses (Ponnan and Ali, 2015).
In this manner, the structural funds that are arranged by the businesses such as broadcast, etc. are quite supporting for development of the underdeveloped region of the EU.
- Social Factors
In EU, the major demographic change is the rising the people’s proportion who are over the age of 45 in the EU and at the same time, the decline in the proportion of people who are in the younger age group.
In addition, it is also found that the customer services delivery is changing and similarly, the demand of view the channels by multiple platforms has been growing that forces the commercial broadcasting businesses to serve the customers by fulfilling their all the requirements.
- Technological Factors
In addition, a substantial amount for the investment is required in the EU in order to create new products that are why the acquired commercial broadcasting businesses need to arrange more funds according to it. At the same time, if companies in the EU wish to develop future revenue streams, then they need to adopt new innovations that can be easily done in the EU.
- Environmental Factors
In the EU, countries are quite ecological sustainable and these countries have innovative technology. In these countries, some are the largest producer of renewable energy. In this way, air pollution is one of the major problems, especially in industrialized areas.
These problems impact the globalization of infotainment industries as these also followed the changes due to technological, political and regulations in the organization (Špaček and Vacík, 2016).
- Legal Factors
EU has well established an economic and social climate in which other companies can invest in their business expansion. At the same time, EU does not have a complex tax system that is why in EU countries, there is no tax of capital gains profit that comes due to the EU country’s property (Kassinis et al., 2016).
This situation gives permission to the investors for the maximum returns on investment that is quite beneficial for the commercial broadcast businesses that are acquired in the EU.
Identify the three costing techniques for adoption by the company and highlight their limitations
In relation to above environmental analysis, it is determined that on the basis of above facts, the company needs to adopt some important costing techniques that can be helpful for it while acquiring the commercial broadcasting businesses within the EU (Tu et al., 2016). In this way, these costing techniques are defined as below:
Marginal Costing
Under the marginal costing, the management can decide the number of the required units needs to be produced under the broadcasting businesses. In addition, for example: under the broadcasting business, the company is already broadcasting 100 programs on an important concept.
With the help of this technique, it can be understood by the company that if the production is increased to 150 programs, it will be more profitable for the company (Paschos et al., 2016). It is because, under the marginal costing, only the variable costs in respect of additional production will be considered.
At the same time, according to this technique, the fixed costs of the production are not taken into consideration because fixed costs do not vary with the changes in production.
Limitations:
- In marginal costing technique, semi-variable costs are usually excluded or analyzed incorrectly that leads the distortions.
- Along with the marginal costing technique, it is a major issue of the over or under-recovery of overheads.
Standard Costing
In addition to the above, the standard costing technique is defined as the technique that consists of the setting of the estimation of the predetermined cost and it also consists of the comparison of this estimation with the actual costs that are actually incurred by the company while broadcasting the programs on television as well as the radio (Yuan and Wang, 2018).
In this way, the difference between actual costs and the standard costs is considered as the variance while measuring the financial performance of the company.
Thus, it can be mentioned that standard cost is identified as the pre-determined costs that are calculated after taking into consideration on the behalf of management’s standardsin the relation of efficient operations in which some relevant necessary expenditure are associated (Saranya and Ravi, 2015).
Limitations:
- It is quite expensive and time-consuming techniques for the companies because the highly skilled and experienced workforce is required for its effectiveness.
- It’s standards quickly become out of date in specific situations such a price, rates and methods change quickly.
- Standard costing is not appropriate for all kinds of industries.
Direct Costing
Direct costing is the technique that is considered a specialized form of cost analysis which only prefers the variable costs in respect to making the decisions and that is why it does not take into consideration the fixed cost that is supposed to be related with the time periods under which these occurred (Meabe et al., 2015).
In this way, it is also determined that the direct cost technique is relatively beneficial for the business while taking the short-term decisions but at the same time, it can lead some harmful outcomes if this technique is considered for making the long-term decisions under the broadcasting businesses.
Limitations:
- While applying the direct costing, it prohibits the external reporting but if it is done, it would include some additional costs within the inventory assets under the balance sheet.
- It sometimes increases the costs of the company where the production is increased.
- Under the direct costing, indirect costing is avoided that is not appropriate for the company while evaluating the financial position of it.
Explain the principles of performance management and champion recommendation of an approach appropriate to the scenario
Performance management is very essential function in every organization in order to review and achieves the higher performance in relation this, there are performance management principles that are helpful for perusing the organizational growth.
At the same time, the main principle of performance management is to establish and deploy the corporate performance management officer responsible executing the company strategies while the help of performance management methods, processes, and frameworks (Hatry, 2018).
In regards to the company must hire the CPM officer report to company CEO and present the reports of overall organizational performance including the company’s financial statements for assessing the performance of lenders, managers, and investors.
According to Refresh and communicate strategy principle of performance management,the company’s internal performance can be monitored through establishing effective communication at each level of organization.
At the same time, the tool is mapping the strategic budgets of the company and its utilization level (Bititci et al., 2012). In relation to the company’s internal performance, company managers and CPM officer need to closely examine and monitor the every department like, advertising, broadcastin, and staffing.
Apart from that, the company need to set the clear objectives and communicate the team so that the workforce can be more productive and contribute towards the achieving the company objectives and mission.
In addition to this, cascade and manage strategy of performance strategy explains the significance of balances scorecard and organizational alignment in place.
At the same time, having a clear mission statement plays an important role in improving the organizational performance (Beck, 2012). It keeps the employee’s morale high and connects the employee’s interest in the alignment of organizational goals.
At the same time, the company needs to establish clear mission objectives other than achieving the company’s significant growth and earning maximum profit. Moreover, the company needs to focus on more on training, learning and development and overall growth of the organization.
While reviewing the case study it is identified that the company is having issues in order to assess the overall organization performance with the help of financial reports.
Therefore, this is the duty of each manager personal in order to prepare and report the authentic financial reports so that it can present a a clear picture of the company financial position.
As to why, these financial reports are useful to review and securitize the performance of lenders, mangers, and investors (McDavid et al., 2018). At the same time, corporate performance officer is equally accountable for reviewing them and scrutinizing the reports and presenting them before higher management.
Apart from that, higher management of the company needs to formulate the clear, feasible and effective organizational mission statements so that the workforce can be aligned into the same direction.
Therefore, there must be clear communication mechanism establishes in order to commutate the company’s strategy, policies and adopted work procedures. Additionally, the company must maintain an effective management information system in order to record the productivity data and other relevant data information for the purpose of performance management (Santos and Brito, 2012).
As to why it helps to retrieve the real and authentic facts based on which required action plan can be formulated in the future as per the company requirement.
After analyzing the important facts above, it can be concluded that with the help of the strategic mission statement, the company can easily improve its organizational performance and can resolve several issues related to the financial statement that are helpful for it
the access performance, monitor performance and the contribution in the improving organizational performance. In addition, the PESTEL analysis is quite helpful in order to provide the critical environmental analysis of the EU for effective performance management of the broadcasting company.
For resolving the identified issues, three costing techniques such as marginal costing, standard costing, and direct costing are described so that all the performance related issues can be eliminated and the company can be made productive.
In addition, some important principles of performance management and the relevant recommendations are also explained that are essential to maintain strategic performance while acquiring the commercial broadcasting businesses within the EU.
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